Market Notebook
Discussion –
PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND closed higher on the week.
TECHNICAL ANALYSIS:
SPY moved nicely higher, closing near trend resistance on the weekly chart.
BND moved higher into what could become an area of price consolidation or the continuation of an upward trend.
SENTIMENT:
Market participants appeared optimistic yet again during the last week. The October 21st low in BND could be the cycle low, depending on inflation data.
ECONOMY AND FUNDAMENTALS:
Economic indicators within the Market Notebook remain mixed. Real economic activity will likely slow over the next few months as the Federal Reserve continues to act to contain inflationary pressures.
Regarding inflation, progress is being made; however, a Fed pivot does not appear likely in the short term. The apparent consensus is that wage inflation will remain sticky, requiring the Federal Reserve to continue with less accommodative policy.
The ideal scenario would be a continued slowing of the economy to reign in wage inflation with a subsequent reacceleration of the real economy shortly thereafter. This scenario is entirely possible. Thus far, the Federal Reserve has played its cards well.
NEXT WEEK:
The tone for next week might be described as cautiously optimistic.
Given that the October lows in BND could be the cycle lows, it may be prudent to adjust portfolio bond holdings.
The situation in equities presents a more challenging call. Equities could see lower prices depending upon corporate earnings reports, along with market participant perceptions regarding the actions or inactions of the Federal Reserve.
All the best during the week ahead!
Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.